Wachovia Battle Lines Drawn

Banking giants First Union Corp. and SunTrust Corp. -- on day two of a bidding war to take over Wachovia Bank Corp. -- each launched a public relations campaign to say their bid is better.

On Monday, SunTrust made a surprise $13.6 billion offer for Wachovia, topping First Union's $12.7 billion merger deal made a month earlier and already seemingly under way.

On Tuesday, both banking companies began appeals to shareholders, analysts, employees and regulators to support their proposal before the board of directors of Winston-Salem, N.C.-based Wachovia. Their messages appeared on Web sites, video broadcast links, press releases and in talks before analysts.

Wachovia said only that its board would meet "in the near future" to consider SunTrust's proposal.

But Wachovia executives made it clear that they intend to go forward with First Union, which promises them more authority than SunTrust's offer.

Wachovia's board had already rejected a merger offer from SunTrust in December.

That led some shareholders to speculate that Wachovia top executives may have sweetheart deals with First Union, although regulatory filings related to the merger give no such indication.

And some Wachovia employees, perhaps fearful of job layoffs, complained on Internet message boards that they prefer SunTrust to First Union.

SunTrust said it would cut about 4,000 jobs and close 150 branches in a Wachovia merger compared with First Union's plan to cut 7,000 jobs and close 300 branches.

Both deals are all-stock bids and fluctuate with each day's market close.

SunTrust offered 1.081 shares for each Wachovia share; First Union is offering two of its own shares for each of Wachovia's.

At Tuesday's close, First Union's offer was worth $61.24 a share, or 6 percent less than SunTrust's $64.95 bid.

Charlotte-based First Union indicated it will not up the financial ante because it thinks its bid is a better deal overall, yielding greater earnings, capital and savings.

"After reviewing SunTrust's unsolicited proposal, we remain firmly convinced that our proposed merger is clearly superior for Wachovia's shareholders," First Union Chairman and CEO Kenneth Thompson said in a statement.

Moreover, "hostile bids in the banking industry have a terrible track record and are clearly disruptive to shareholders, employees and customers," Thompson said.

SunTrust Chairman Phillip Humann, taking a dig at First Union's former merger woes, told analysts that SunTrust has a successful history of integrating mergers and has the talent and resources to pull off the Wachovia deal "in a very customer-friendly manner."

From Florida's perspective, analysts said there seems little difference whether First Union or SunTrust ultimately wins over Wachovia, with the exception of possibly more branch closings under First Union.

Joan Fleischer Tamen can be reached at jtamen@sun-sentinel.com or 305-810-5030.